Will They Take the Money and Work? People's Willingness to Delay Claiming Social Security Benefits for a Lump Sum

33 Pages Posted: 16 Nov 2018

See all articles by Raimond Maurer

Raimond Maurer

Goethe University Frankfurt

Olivia S. Mitchell

University of Pennsylvania - The Wharton School; National Bureau of Economic Research (NBER)

Ralph Rogalla

St. John's University - Tobin College of Business - School of Risk Management, Insurance, and Actuarial Science; Goethe University Frankfurt - Department of Finance

Tatjana Schimetschek

Goethe University Frankfurt - Department of Finance

Date Written: December 2018

Abstract

This article investigates whether exchanging Social Security delayed retirement credits, currently paid as increases in lifelong benefits, for a lump sum would induce later claiming and additional work. We show that people would voluntarily claim about 6 months later if the lump sum were paid for claiming after the early retirement age, and about 8 months later if the lump sum were paid only for those claiming after their full retirement age. Overall, people will work one‐third to one‐half of the additional months. Those who would currently claim at the youngest ages are most responsive to the lump sum offer.

Suggested Citation

Maurer, Raimond and Mitchell, Olivia S. and Rogalla, Ralph and Schimetschek, Tatjana, Will They Take the Money and Work? People's Willingness to Delay Claiming Social Security Benefits for a Lump Sum (December 2018). Journal of Risk and Insurance, Vol. 85, Issue 4, pp. 877-909, 2018. Available at SSRN: https://ssrn.com/abstract=3285372 or http://dx.doi.org/10.1111/jori.12173

Raimond Maurer (Contact Author)

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Olivia S. Mitchell

University of Pennsylvania - The Wharton School ( email )

Philadelphia, PA 19104-6365
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Ralph Rogalla

St. John's University - Tobin College of Business - School of Risk Management, Insurance, and Actuarial Science ( email )

101 Astor Place
New York, NY 10003
United States

Goethe University Frankfurt - Department of Finance ( email )

House of Finance
Grueneburgplatz 1
Frankfurt am Main, Hessen 60323
Germany

Tatjana Schimetschek

Goethe University Frankfurt - Department of Finance ( email )

House of Finance
Theodor-W.-Adorno-Platz 3
Frankfurt, 60629
Germany

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